[Asia Exclusive] "For Small Business Owners Facing Limits, Provide Closure Costs and Offer Loan Repayment Reduction and Deferment"

Debt Adjustment Linked with Credit Recovery Committee as an Alternative
Strengthening Job Training to Support Rechallenge Also Needed

Odongyun, President of the Small and Medium Venture Business Research Institute, is speaking in a recent interview with Asia Economy.

[Asia Economy Reporter Donghyun Choi] Odongyun, President of the Small and Medium Venture Business Research Institute, cited a "orderly exit" as a practical support policy for small business owners suffering from COVID-19. The core of this policy is to support closure costs and reduce loan repayment burdens so that small business owners facing the risk of closure can stabilize their business liquidation.

In a recent interview with Asia Economy held in Gwanghwamun, Seoul, President Oh said, "We need to break the M?bius strip of loss compensation for small business owners." When the government issues national bonds to support small business owners, liquidity supply causes inflation. When deficit bonds flood the market, bond prices fall and market interest rates rise. This leads to the side effect of raising loan interest rates, which are a trigger for the low-income economy. It is a vicious cycle.

President Oh said, "Providing loss compensation to affected small business owners could inadvertently lead to a situation where interest burdens exceed the support amount," adding, "Small business owners who cannot even properly receive support funds would feel even more unfair." He continued, "Supplying liquidity is a negative factor for the consumer price inflation rate, which is already running in the high 3% range," pointing out, "On one hand, interest rates are raised to suppress inflation, while on the other hand, liquidity is supplied, stimulating inflation."

President Oh viewed this compensation method as a burden on the Korean economy and not very helpful for the livelihoods of small business owners. He expressed the opinion that rather than "pouring water into a bottomless jar" type support, providing closure support to small business owners who have reached their limits is a more realistic support measure. President Oh said, "Taking on more debt to repay existing debt is the worst situation," and added, "Closure cost support, credit recovery, loan repayment reduction, and deferral should be bundled together as a package."

He also proposed linking the small business owner debt adjustment program with the Credit Recovery Committee as an alternative. The purpose is to prevent debt collection for a certain period so that small business owners who decide to close can do so stably. He also saw effectiveness in adjusting debts or reducing interest if certain conditions are met. Furthermore, he mentioned the need for policies that help smooth livelihood maintenance after closure by deferring loan repayments or strengthening vocational training to support re-challenge.

President Oh said that government guidelines on closure and livelihood maintenance should be prepared for an orderly exit. He emphasized, "If loss compensation is provided as a fixed amount based simply on sales decline, there is a higher probability that business owners will prefer to maintain their livelihood," and added, "For businesses with significant sales decline, support should be designed to favor closure costs and credit recovery over loss compensation."

This content was produced with the assistance of AI translation services.